Just as President Trump signed an executive order declaring the US will withdraw from the Trans-Pacific Partnership (TPP) trade agreement, Australian Trade Minister Steve Ciobo confirmed that the Turnbull Government would continue to work ‘flat-out’ to revive the TPP deal. From The ABC:
“It may come to pass — and certainly it appears to be the case — that the US won’t ratify the TPP but the gains we have achieved absolutely warrant hanging on”.
…”there is also a tremendous amount of benefit [that has] been able to be achieved under the agreement that countries don’t want to let go.”
Ciobo committed to pursuing the TPP with the remaining 11 members, thus requiring the pact to be renegotiated.
Prime Minister Malcolm Turnbull also continued to spruik the benefits of the TPP and Australia’s ongoing involvement. From The Australian:
Mr Turnbull said that it was important for the government to continue to beat the free trade drum.
“We need trade. Trade is driving jobs,” he said. “That’s those exports, whether it’s from Portland, whether it’s from farms, right across Australia.”
“We are working flat out to find more opportunities for Australians to sell their services, their goods, their produce. Because that drives employment here. It’s in our interest to have those big open markets.”
For its part, Labor has rightfully questioned whether a TPP without the US is even worth pursuing and has demanded that the Government provide supporting modelling. From The Australian:
Bill Shorten and Opposition trade spokesman Jason Clare have attacked the government’s pursuit of an early vote to ratify the TPP deal through the parliament as a “waste of time” given Mr Trump’s strong opposition to the agreement…
Mr Clare took aim this morning at the government’s ongoing pursuit of the TPP without having any modelling to quantify the economic benefits of a deal to Australia without the participation of the US.
“The Turnbull government is now saying Plan B is an alternate agreement with the other 11 countries that were part of the TPP,” he said. “However, they have no idea whether this is even worth doing.”
Meanwhile, Freedom of Information requests have confirmed that DFAT does not have modelling to support a TPP without the US. From The Guardian:
…freedom of information documents show the Department of Foreign Affairs and Trade (DFAT) has not been asked to model how the TPP would affect Australia’s economy if the agreement went ahead without the US.
Jason Clare, the shadow minister for trade, has filed two FOI requests seeking access to any modelling, but the department has told him no such modelling exists.
The first FOI, on 28 November, was filed two weeks after Ciobo told the ABC’s Insiders program the TPP could not officially go ahead without the US but an 11-country TPP could go ahead “in theory”.
The second FOI, on 10 January, was filed a week before Turnbull said he still held out hope the TPP was not dead.
On both occasions DFAT said no modelling had been commissioned.
Clare said the government should not be promoting a potential amended TPP without knowing what impact it would have on Australia’s economy.
Finally, The Guardian’s Greg Jericho has penned a thoughtful piece today arguing that there is little evidence a TPP would bring the promised big economic gains – with or without the US’ involvement:
As the productivity commission concluded when it investigated the benefits of such agreements back in 2010, rather than cause “big gains” in exports, mostly exporters just shift from exporting from one country outside the agreement to one within it…
One of the recommendations in the commission’s 2010 report was that future trade deals be subject to economic modelling, which “should include realistic scenarios and be overseen by an independent body”.
The commission also argued that “a full and public assessment of a proposed agreement should be made after negotiations have concluded – covering all of the actual negotiated provisions”.
We have not had anything at all like that for the TPP – let alone one without the USA.
So we have to take the facts on faith.
… the big economic boosts from freer trade have pretty much all been accounted for and thus agreements like the TPP are unlikely to see any boon in economic growth. We didn’t need a China free-trade agreement to have a mining boom.
…if the government believes their claims about the benefits are actually facts, all they have to do is let an independent body test them. Until then, their facts about big gains are just big claims and best treated with great scepticism.
Too right. Modelling by the Global Development and Environment Institute at Tufts University actually found that the TPP (involving the US) “would lead to losses in employment and increases in inequality”, with employment in Australia estimated to contract by 39,000 jobs:
Meanwhile, modelling by the World Bank found that “by 2030, the TPP will raise member country GDP by 0.4-10 percent, and by 1.1 percent, on a GDP-weighted average basis”. This might sound impressive, but these are cumulative increases to 2030.
And here’s the break-down by country, which shows that Australia would receive a cumulative bump-up in GDP of just 0.7% by 2030, or 0.07% extra growth annually if we assume that the agreement comes into place by 2020:
- Vietnam – 10%
- Malaysia – 8%
- Brunei – 5%
- New Zealand – 3.1%
- Singapore – 3%
- Japan – 2.7%
- Peru – 2.1%
- Mexico – 1.4%
- Canada – 1.2%
- Chile – 1%
- Australia – 0.7%
- US – 0.4%
So, according to the modelling, a TPP involving the US would provide only a minuscule boost to output along with job losses. Hardly sounds like a groundbreaking deal that deserves so much focus from the Turnbull Government, does it? Especially given the biggest economy in the pact has already killed the deal, thus requiring renegotiation from the remaining members.
The fiasco over the TPP is yet more confirmation that the Do-Nothing Turnbull Government is far more interested in gimmicks and smokescreens than addressing real issues affecting the nation.
